The merger control regime was introduced in Romania by the Law on Competition No. 21/1996 (Competition Law). The Romanian Competition Council (CC) is the authority empowered to apply the Competition Law. In addition, the Supreme Council for the Country’s Defence (SCCD) can oppose transactions that raise risks from a defence policy perspective. The Competition Law was amended substantially in August 2010 by Government Emergency Ordinance No. 75/2010, which introduced a number of important changes in the area of merger control, including a substantive test for assessing merger impact (the significant impediment of effective competition (SIEC) test), the ability of merging parties to notify their intention to merge, longer deadlines for the CC to take decisions and a revised authorisation fee. The Competition Law was republished in 2014, but its provisions continue to be amended. Among significant changes, the CC will now be required to obtain a judicial authorisation to inspect any premises belonging to undertakings being investigated or to their management or employees.
Under the domestic antitrust rules, an economic concentration is performed through the merger of previously independent undertakings, the creation of a full-function joint venture or the acquisition of control of an undertaking or a part of it. Transactions above the following thresholds must be examined and approved by the CC:
- a the worldwide aggregate turnover of the parties (e.g., the purchaser and the target) and their groups exceeds €10 million; and
- b at least two of the involved undertakings have each registered a turnover in Romania of €4 million.
These jurisdictional thresholds establish the CC’s competence to conduct a review, and the CC cannot review mergers that do not meet the thresholds.2 The thresholds can be amended by Competition Council Order with the approval of the Ministry of Economy, with any such amendment entering into force six months from publication in the Official Gazette of Romania.3
Economic concentrations occurring outside Romania are subject to notification if the above thresholds are exceeded,4 the clearance of the CC being actually required both for economic concentrations involving foreign undertakings with Romanian affiliates, and for concentrations where the parties do not have a Romanian corporate presence but are reaching the turnover thresholds on the Romanian market through direct sales.
The CC’s secondary legislation on the merger control system is included mainly in the Regulation regarding the economic concentrations approved by the Competition Council Order No. 385/2010 (Merger Regulation). The Merger Regulation includes practical and procedural clarification with respect to some aspects of merger assessment. Harmonisation with the EU merger rules was also achieved through Instructions on matters regarding the concepts of economic concentration, merging parties, full-function joint ventures and turnover, and Instructions on ancillary restraints; the Instructions generally mirror the European rules. Order No. 688/2010 (Instructions on remedies) contains rules applicable to remedies offered by merging parties in response to a commitments decision. Guidelines on the calculation of the authorisation fee for merger-clearance procedures have been implemented by Order No. 400/2010. The CC has also enacted Rules on access to files in merger clearance procedures.
In 2014, further amendments brought the national merger control rules in line with the updates to the European merger control regime made by the European Commission at the end of 2013, and have a focus on:
- a the importance of pre-notification discussions;
- b increasing transparency by publishing a notice of transactions notified and falling under the merger rules; and
- c the increased application of the simplified procedure.
Therefore, a relevant market is now considered to be affected if the parties to a merger have a combined horizontal market share of 20 per cent or more, or a combined vertical market share of 30 per cent or more.
The Competition Law contains a presumption of dominance for a company or companies exceeding a 40 per cent market share. However, the clearance test under the merger control rules is not the creation or strengthening of a dominant position as a result of which competition might be significantly restricted or distorted, but a more complex analysis on the basis of which concentrations that do not reach ‘dominance’ might still be deemed to substantially lessen competition. In its practice, the CC seems to have lately focused its analysis on whether the economic concentration would likely lead to price increases.5
The clearance procedure still includes a Phase I analysis, and if the CC suspects that the clearance test will not be met, it will start a Phase II investigation. Most transactions are cleared under Phase I, with very few so far having undergone a Phase II investigation.
II YEAR IN REVIEW
i General considerations
According to a barometer prepared by Ernst & Young based on publicly available information, in 2015 Romania registered an increase in terms of value of transactions.6 However, this growth is not reflected in the number of economic concentrations that have been subject to merger control by the CC, as not all of them fell under the Romanian merger rules. In 2015, the number of economic concentrations cleared by the CC decreased by 12 per cent compared to 2014, amounting to 37 mergers,7 while by May 2016, 10 economic concentrations gained final clearance.8 No merger prohibition decision has been issued since 2001. From the publicly available information, no case required a Phase II clearance procedure in 2015. The last case requiring such in-depth analysis was the takeover of Hollywood Multiplex Operations by Cinema City International NV in 2012; the CC found that the combination between the two raised serious competition concerns that could not be eliminated through the commitments submitted by the acquiring party. However, the parties abandoned the transaction, and the investigation was closed without any decision being issued.
During 2015 and up to May 2016, the CC dealt with transactions in various sectors, particularly in the fast-moving consumer goods retail, financial, energy and real estate and construction sectors. Other sectors analysed by the CC were IT, pharmaceuticals and medical services, chemicals, agribusiness, and e-commerce services.
Trends and predictions
In 2015, the Romanian market for transactions was dynamic, showing a change in the trend of investors, shifting from financial investors towards strategic ones.
An important trend on the Romanian market is the consolidation of the financial sector, where major transactions have occurred in the banking, insurance and leasing segments. Two transactions cleared by the CC in 2013 – Citibank/Raiffeisen Bank and RBS Romania/Unicredit Tiriac Bank, which concerned the sale of retail products and clients’ portfolios – showed the banks’ need to concentrate on the retail sector. This trend continued in 2014, with OTP Bank Romania taking over Millennium Bank and Unicredit Tiriac Bank acquiring the corporate portfolio from RBS Romania, while in 2015, Banca Transilvania acquired control over Volksbank Romania. In May 2016, Nextebank took over Banca Comerciala Carpatica. With the entry into force of the Solvency II Directive, additional takeovers are expected to be seen in the insurance sector in 2016.
No commitments decision has been issued in 2015. However, the CC showed its approach to the application of the Instructions on remedies in two decisions issued in 2014. In the Agrana Zucker/Zaharul Liesti and Lemarco Cristal transaction,9 the CC gave its clearance based on behavioural commitments (a commitment to transfer the import licences for cheap raw sugar to other producers in Romania and not to acquire any other sugar factory in Romania for a period of five years). However, in the Mega Image/Angst Retail transaction,10 the commitments accepted by the authority concerned the structure of the transaction (the assignment of two retail stores, after the parties gave up the acquisition of one retail store).
Few privatisations are expected in 2016. The privatisation of CFR Marfa (the national rail freight transport operator), which began in 2013, has not yet been accomplished. The process is expected to be relaunched and consultations are supposed to be carried out with the CC and the International Monetary Fund. With respect to Posta Romana (the national operator of postal services), discussions were held in 2015 with Bpost without reaching an agreement. Currently, the management of Posta Romana is focused on developing the technology and diversifying the services, and will later resume its privatisation plan. In 2016, it also started the privatisation process for Oltchim (a major producer in the chemical industry), although there is an ongoing investigation by the European Commission with respect to a potential state-aid grant to the company.
Lack of transparency
CC merger clearance decisions still do not generally indicate the merging parties’ market share or any other economic or market data that could serve as guidance for further practice. In 2014 and 2015, the CC did publish several decisions where the ranges of the parties’ market shares are mentioned (thus giving an implicit indication of the authority’s reasoning), while in others it indicated certain market shares or the Herfindahl-Hirschman Index level before and after the transaction; however, this does not yet constitute a general practice regarding transparency in decisions.
ii Mergers in the medical services market11
In December 2015, the CC cleared the acquisition of International Healthcare Systems (IHS), one of the largest dialysis service providers in Romania, by Diaverum Romania and Diaverum Holding (members of Diaverum Group, one of the global providers of renal medical services and the largest independent supplier of medical services in Europe). The acquisition of IHS came as a further consolidation of Diaverum’s position in the Romanian market, following the acquisition of Dialmed (2011), Renamed Nefrodial (2013), Nefro Care Center (2013), Medical Clinic Arnaldo (2014) and a dialysis centre in Sibiu from Nefromed Dialysis (year of acquisition not public).
Market definition and assessment
In accordance with its previous practice, the CC considered that the market for dialysis services can be divided in haemodialysis (HD) and peritoneal dialysis (PD), based on the type of treatments provided. The notifying party provided arguments that nephrology services and home-care services should not be regarded as separate markets, given that the merging entities provide such services as complements to, and closely connected with, dialysis services. Nephrology services are performed on patients with chronic kidney diseases as well as certain patients with acute kidney diseases, to provide pre-dialysis care and diagnose services. However, the CC left open the issue of whether nephrology services should be regarded as a separate market, and focused its assessment on the HD and PD segments.
One interesting aspect noted in the decision refers to the fact that although PD has certain medical and economic advantages compared to the HD (e.g., the patient is less dependent on the dialysis clinics and it better preserves the renal function, which implies lower costs of treatment and would allow for treatment of a larger number of patients within the same budget), the number of PD patients is decreasing and, according to the information provided by the 2013 Renal Registry, if the current decrease persists, PD may disappear in Romania by 2020.
With respect to the geographic market, the CC previously took into account the distance the patients are willing to or are able to travel for the purpose of receiving treatment. It therefore has a local character with a catchment area of 50km around the dialysis centre. However, in the context of the arguments submitted by the parties, the CC admitted that the market in Bucharest has certain characteristics that would justify a catchment area of 100km compared to the other counties in Romania. The main arguments that the CC took into account are as follows:
- a the counties where university centres are available have nearly three times more treated patients than the neighbouring counties;
- b patients tend to choose to be treated in Bucharest because usually this is where they are initially diagnosed;
- c transportation costs for the treatments are reimbursed and, therefore, such costs do not represent a barrier for patients to being treated outside their home county, even if they have available centres in their counties; and
- d statistic information provided by the parties show that a significant number of patients within 100km radius from the centres make the effort to be treated in a Bucharest clinic.
For the HD and PD segments in Brasov and Bucharest, the market post-transaction seemed to be strongly concentrated (delta HHI exceeded 150). However, the CC cleared the transaction given that:
- a the PD market is decreasing continuously;
- b the market share of the merging parties decreased during 2012–1014;
- c the market share of the competitors have been taken into account (values redacted);
- d the prices for the HD and PD services are regulated and thus the price is not a competitive element for the entities active in the market;
- e the competition is manifested in the market by the quality of the services provided;
- f patients are free to choose their service provider, changing their preference without any cost and without any restriction based on their domicile or other geographical limitation; and
- g the public funds for dialysis services have been constantly increased, which has allowed new patients to benefit from the dialysis services and facilitated the entry of new centres in the market.
iii Merger in the daily consumer goods retail sector cleared with commitments12
In November 2014, Mega Image SRL, a member of Delhaize Group, obtained a clearance decision for the acquisition of assets of Angst Retail. The transaction concerned the transfer of the retail sale activity performed in 20 stores located in Bucharest and Ilfov (including equipment, stocks, employees, goodwill) and the right to use these stores. When submitting the notification, Mega Image was already the largest retail chain in Romania, having 353 shops, of which 176 were supermarkets (123 in Bucharest) and 177 were ‘Shop&Go’ stores similar to the traditional stores (150 in Bucharest).
Market definition and assessment
The CC analysed the impact of the transaction on the relevant markets of the retail sale of consumer goods at the upstream level on the supply market where the retailers act as buyers; and at the downstream level on the retail market, where it considered that the traditional stores and discounters act on the same market with hypermarkets and supermarkets, while the cash and carry distribution channel is not part of this market as its target is mostly formed of other retailers and not final consumers.
In its analysis, the CC considered that the different store formats (hypermarkets, supermarkets, traditional retailers, discounters) compete with each other as such, irrespective of the selection of products they carry.
At the geographical level, the CC took into consideration a catchment area of 10 minutes by car for all Angst stores. With respect to a possible extension of the geographical area, the CC analysed the overlap between three stores – in Amzei, Perla and Academiei – based on the density and the placement of the relevant stores as well as the characteristics of central Bucharest (where the stores are located), which contains a high density of buildings and intensive pedestrian traffic.
As certain concerns were identified for the stores located in Bucharest (Amzei, Perla and Academiei), the parties agreed not to acquire the store in Perla, and committed to assign the Amzei and Academiei stores or other stores within the Mega Image network located in the same area that had sales in 2013 equal or higher to the sales of the Amzei and Academiei stores. Furthermore, Mega Image committed not to subsequently acquire influence over the assigned properties for a period of 10 years.
Mega Image continued its extension through new store openings, but also through a new 2015 acquisition of two stores belonging to Nic Import Export.13 Although several competitors expressed their concerns with respect to the acquisition, the CC decided that no risks are raised as:
- a the combined market share of the parties is under 40 per cent;
- b there are several strong competitors in the area; and
- c there are a few openings of new stores foreseen in the following year.
The CC also mentioned as an argument the reduced market share acquired by Mega Image after the transaction but without indicating its value.
iv Merger in the white sugar market cleared with commitments14
In the context of the full deregulation of the sugar market in the European Union as of 2017, Agrana Zucker acquired two sugar production units from Lemarco SA. The transaction involved the two leading retail white sugar market players in Romania and was approved by the CC with conditions six months after notification. Notably, the notification was made based on a letter of intent stating that a sale and purchase agreement was to be executed only if the CC authorised the merger in a form satisfactory for Agrana.
Market definition and assessment
The CC analysed the impact of the transaction on the white sugar market in two segments: industrial and retail. For the retail sector, a significant increase was found, with no other competitor having more than 10 per cent market share following the transaction. The CC considered that market share levels are necessary, but not sufficient, to identify a dominant position. Thus, it also took into account the stability of parties’ market shares over time and the market shares of competitors, and performed a thorough analysis of the barriers to entry on the market.
The main barrier identified was the access to raw materials for the production of sugar (sugar beets and sugar cane). While beet production is limited due to national quotas established at EU level and distributed to different producers, access to sugar cane is restricted by both pricing and non-pricing barriers and requires import licences. As the two sugar production units had import licences for sugar cane (CXL import licences), the CC was concerned that the acquirer could limit competitors’ access to cheap raw material, thus strengthening its dominant position.
Given the concerns identified by the authority, Agrana proposed the following commitments:
- a the transfer to authorised sugar processors with production units in Romania of CXL import licences15 that may be obtained based on the permanent activity refiner status of the two production units acquired, until 30 September 2017; and
- b an obligation not to acquire any other sugar factory in Romania for a period of five years.
The transfer of licences had to be made without payment and in a non-discriminatory manner. The CC considered that the transfer of import licences to other producers insured such producers’ access to alternative sources of cheap raw material, and thus will enable them to compete effectively with Agrana. However, if no producers accept the import licences,16 Agrana is permitted to use them, and will have to submit an annual report to the CC within 30 days of the end of the market year.17 The report must include information on the raw sugar imported based on these import licences as well as information regarding the quarterly wholesale average price of white sugar from other sources.
v Consecutive mergers between the same parties18
In April 2014, Fater SpA acquired from the Procter & Gamble Company (P&G) the assets used for the manufacturing, packaging, distribution, promotion and sale of fabric-care products under the ‘ACE’19 brand (Transaction 1).
In May 2015, ITF SpA requested the CC’s clearance for the acquisition of assets related to the luxurious perfumes business under the ‘Laura Biagiotti’ brand from P&G (Transaction 2).
Fater is controlled by P&G and Angellini Group, and thus the transaction constituted a change from sole control to joint control of the ACE business. In turn, ITF is controlled by Angellini Group. As the two transactions took place between companies belonging to same groups, both on the seller side and on the acquirer side, during a period of two years, the CC considered the transactions as a single economic concentration, realised as of the date of the second transaction.20 The CC mentioned that in all cases where control is acquired by the same undertaking, such transactions between same parties represent a single economic concentration, even in the absence of interdependence between the transactions.
The decision issued by the CC for Transaction 2 supplemented the clearance decision for Transaction 1. As the authorisation fee was paid upon reaching the first clearance decision, and the two transactions have been considered a single economic concentration, no other authorisation fee was necessary.
III THE MERGER CONTROL REGIME
The current merger control regime, in force since 1997, was amended in August 2010 and October 2014, leading to greater harmonisation with the European regime.
i Clearance procedure under the Merger Regulation
As per the rules in force, economic concentrations exceeding the thresholds must be submitted for approval to the CC. Economic concentrations have to be notified ‘promptly’ following the conclusion of the relevant agreement, the announcement of the public bid or the takeover of the controlling shares prior to their implementation. Failure to notify a transaction and implementation of the concentration before its authorisation (i.e., gun jumping) are subject to a fine between 0.5 and 10 per cent of the parties’ turnover in the financial year prior to the fining.
The Merger Regulation also allows the involved firms to notify the CC of their intention to merge at any time prior to the conclusion of the transaction. The parties would, however, need to provide sufficient evidence of such intention (e.g., a memorandum of understanding, a gentlemen’s agreement, pre-agreements, framework agreements, draft of the sale-purchase agreement). This provision is expected to be frequently used by firms involved in economic concentrations.
The parties must submit a standard notification form accompanied by attached relevant documentation. The content of the notification form is in line with that used in the procedure before the European Commission. In October 2014, Competition Council Order No. 438/2014 was published, reflecting the changes made by the European Commission in 2013. The CC may ask questions, and it regularly uses this right. Upon receiving the notification form and the supporting documents, the CC has 20 days to review it and, if necessary, to request additional information from the parties. Such information must be submitted within 15 days of the date of the request, with a possible further five days’ extension upon reasonable justifications. If after the expiry of these terms the information provided is not sufficiently clear, the CC can impose fines. Once the parties provide all necessary information, the notification will be declared complete (the CC will immediately communicate the date upon which the notification became complete and effective to the parties). Under the Merger Regulation, the CC has 45 days after the notification becomes complete to decide whether the concentration comes under the scope of the merger rules; does not raise serious antitrust concerns; or raises competition doubts.
Once the entire procedure is finalised, the CC shall issue:
- a a non-approval decision if the merger raises serious competition concerns;
- b a decision clearing the merger if it ascertains that the analysed transaction is not deemed to create or to consolidate a dominant position threatening competition on the relevant national markets; or
- c a commitment decision, which will necessitate remedies being fulfilled by the parties; these will be chosen from a series of remedies provided within the Instructions on remedies (e.g., the divestment of a part of the business, the termination of exclusive arrangements or the transfer of an important technology).
The Merger Regulation also provides a simplified clearance procedure that can be used in limited circumstances and, in any case, only if the aggregate market shares of the parties do not exceed 20 per cent (horizontal relations) or 30 per cent (vertical relations). In its recent practice, the CC used this procedure more often. In 2014, 50 per cent of economic concentrations were analysed by the CC under the simplified procedure, while in 2015 it reached 57 per cent.21 Nevertheless, the CC remains free to start the analysis under the simplified procedure and continue it under a full clearance structure, as it did in one case in 2014.22
ii Enforcement of the SIEC test
In contrast to the dominance test established by the former rules, the Merger Regulation establishes that the assessment test for an economic concentration is the SIEC test: assessing whether an economic concentration significantly impedes effective competition on the Romanian market or on a substantial part of it, particularly following the creation or strengthening of a dominant position. The CC will thus take into account various criteria for assessing the merger, such as:
- a the relevant market structure;
- b actual or potential competition;
- c the parties’ market position and their economic and financial strength;
- d alternatives available to suppliers and users, their access to supply sources and markets;
- e legal or factual barriers to entry;
- f the trends of offer and demand for the goods in the relevant market;
- g the interests of intermediary and end consumers; and
- h any evolution of technical and economic progress, to the extent that it benefits consumers and it is not an obstacle to competition.
iii Presumption of dominance above a 40 per cent market share
The Competition Law provides a presumption of dominance for companies holding a market share of over 40 per cent.
Although the CC does not sanction a dominant position per se (only an abuse of such market power on the relevant market), the burden of proof is on the company presumed to be dominant; once the presumption is made, the company has to rebut it.
iv Access to the file
During the review procedure, access to the file is allowed only to the merging parties (i.e., the buyer’s and seller’s shareholders and the merging company’s managers). The Instructions on the access to the file preclude the access for third parties unless the CC considers it is necessary for the third parties to submit their observations; such right does not, however, allow third parties access to confidential information. The instructions on the access to the file have a narrow interpretation of what constitutes confidential information, but it generally covers business secrets and any sensitive information that would severely compromise the merging parties’ activity if disclosed. A redacted version of the confidential documents and information must be prepared by the party, pointing out their sensitiveness. In October 2013, the CC published guidelines on the confidentiality of documents that include practical information on this topic.
In practice, the CC routinely invites third parties (i.e., the parties’ competitors or commercial partners, regulatory authorities or any other interested entities) to submit observations or any other comments or information whenever a new submission for merger approval is addressed to the CC. Interested third parties may challenge the final decision under the regular procedure regarding the resolution of administrative disputes. To our knowledge, only one clearance decision23 has been challenged in court by a third party (in 2012). It was finally dismissed by the High Court of Cassation and Justice in November 2014, as the acquirer abandoned the transaction and thus no potential competition risks on the market could justify the interest of the claim.
The initiation of a merger clearance procedure stops a transaction and the parties cannot take any further measures to implement it. The Merger Regulation makes no further reference to ‘reversible’ or ‘irreversible’ steps that can be taken by the acquirer with respect to the target, but lists only the actions that might be considered ‘irreversible’ after implementing a concentration:
- a directing the acquired undertaking to enter or exit a market or change its scope of activity;
- b using the voting rights granted by the acquired shares to replace the directors, to approve the costs and expenses budget, the business plan or the investment plan of the target;
- c changing the corporate name of the acquired entity;
- d restructuring, shutting down or spinning off the acquired undertaking or its assets;
- e laying off employees of the acquired undertaking;
- f terminating material agreements of the acquired undertaking or causing the same to go public; and
- g listing the acquired undertaking on a stock exchange.
Whenever the CC finds proof of gun-jumping, a fine of up to 10 per cent of the turnover in Romania from the year preceding the infringement decision may be applied. The parties may, however, ask the CC to grant derogation and allow implementation of the transaction before its clearance if sufficiently strong financial or economic arguments are made. In April 2013, the CC granted such derogation for the first time in three years for the takeover of Bank of Cyprus Romania by Marfin Bank Romania. The CC based its decision on the economic situation of the bank, the emergency situation of its clients and the general economic interest of avoiding the possible contagion effect of distrust in banks. Another derogation was granted in January 2015 to Banca Transilvania for the takeover of Volksbank, which was in a fragile financial situation that put at risk all its contractual partners, especially consumers having contracted loans in Swiss francs.24 Specific to this transaction was also the fact that the target’s main shareholder was part of a group in an ongoing substantial reorganisation procedure in Austria that had decided to quickly cease its banking activity and exposure in Romania. Thus, a ‘lock box’ mechanism was implemented in the sale purchase agreement stating that no price adjustment can be made after signing, with the transfer of benefits and risks to the acquirer thereby occurring at signing. The target had to perform its business activity until closing during the normal course of business, with the observance of clear parameters and within certain limits regarding exceptional operations.
In 2015, two other derogations were granted by the CC, but such decisions were not published by May 2016.25
vi Challenging CC decisions
A CC decision may be challenged by the parties before the Bucharest Court of Appeal within 30 days of its communication. The Court of Appeal’s decision may in turn be reviewed by the High Court of Cassation and Justice. The execution of a CC decision can be suspended by the Bucharest Court of Appeal only if a fee is paid in accordance with the Code of Fiscal Procedure (as of July 2015, the calculation of the fee is more complicated, depending on the corresponding range of the fine and it being determined as a percentage applied to the total amount of the fine or as a fixed amount plus a percentage applied to the fine).
vii Authorisation fees
The calculation of the authorisation fee level was changed as of 1 January 2016; its value varies from €10,000 to €25,000 for transactions cleared in Phase I analysis and from €25,001 to €50,000 for the ones approved after the analysis in Phase II. The levels depend on the target company’s turnover or the merging parties’ cumulative turnovers if a new full-function joint venture is created. Although the Guidelines on the authorisation fee have not been amended following the distinction inserted in the law for different levels of authorisation fee in case of Phase I/Phase II analysis, it can be reasonably interpreted that the same level range for the relevant turnover will be applied. Thus, for transactions where the target or the parties to the joint venture have a turnover exceeding €250 million, the authorisation fee is capped at €25,000 in case of clearance in Phase I, and at €50,000 if the authorisation is granted in Phase II.
viii Timing of the procedure
In theory, it should only take between two and three months for the CC to clear a merger raising no dominance concerns; in 2015, the CC generally cleared the economic concentrations in two months. Nevertheless, these time frames have been substantially exceeded in some cases. The parties may often be able to accelerate the procedure by consulting with the CC prior to the filing, correctly preparing the notification form, promptly responding to the CC’s requests for information and being proactive in proposing solutions (reports, commitments, etc.) to alleviate the concerns of the case-handling team.
IV OTHER STRATEGIC CONSIDERATIONS
The Competition Law provides that the government can prohibit by decision – if proposed by the SCCD – mergers with potential impact on national security. Defence, infrastructure, energy or electronic communications have in the past been areas of concern for SCCD and might – at least theoretically – need such approval. The CC instructions provide that even transactions below the de minimis threshold should be notified to SCCD. This provision raises some confusion for market players as it does not provide further details as to the areas or size of the transactions that would be subject to this scrutiny. If the SCCD informs the CC that a notified economic concentration could raise concerns from a national security perspective, then procedure before the CC is suspended until the SCCD expresses its position with respect to the transaction. The CC can request the information necessary for the analysis to be performed by the SCCD.
The CC has increased its level of expertise in the merger control process by undertaking complex assessments even in cases of economic concentrations with a less significant impact on the market.
The CC continues its restrictive approach when assessing ancillary restraints to economic concentrations. The CC seems determined to scrutinise strictly and block the provision of any non-compete clauses imposed on vendors, restrictions in licence agreements, non-disclosure undertakings ancillary to mergers and agreements that may be indicative of a restriction of competition. In its recent decisions, the CC has begun to expressly mention that the parties involved in the economic concentration have to self-assess their ancillary restraints and that the authority will perform an assessment only if required to do so by the parties. This seems to imply that if not expressly required, the CC will not perform an assessment of the ancillary restraints, and thus the clearance decision will not cover these.26 Also, in one decision from 2016 the CC indicated that its analysis of ancillary restrains is limited to establishing the direct and objectively necessary character of such restrains, without requiring an analysis from the perspective of Article 5 and Article 6 of the Competition Law, respectively, or their correspondent Article 101 and Article 102 from the Treaty on the Functioning of the European Union.27
While encouraging firms to request preliminary (informal) consultation before merger notification, the CC shows no leniency to gun-jumping, with two substantial fines applied in 2011 to acquiring parties implementing mergers before due clearance. The CC sanctioned one case of gun-jumping in each of 2012 and 2013. In 2014, 2015 and up to May 2016, the CC had not applied sanctions for gun-jumping practices. In 2014 had started only one investigation for such practices on the media communication services market, while in 2015 another investigation was opened in the financial sector. The small number of cases of gun-jumping in the past few years may indicate that parties have become more cautious regarding the early implementation of mergers.
In 2014, the CC was subject to a peer review performed by the OECD. In the OECD’s report,28 it was suggested that notification thresholds could be reviewed. No such review has been performed as of May 2016.
V OUTLOOK and CONCLUSIONS
Similar to 2014, signs of market dynamism are being seen in several sectors, predominantly in the banking industry, energy and mining, real estate and fast-moving consumer goods. This trend continued in agribusiness, medical services and IT. The dynamism of the market will be ensured by investors reaching the end of their investment period and foreseeing their exit, which will imply the correlative entrance on the Romanian market of other investors or producers wishing to take over businesses existing on the market, while other actors will likely continue their expansion and consolidation of their position on the market. The beginning of 2015 saw one of the most significant transactions in several years, namely the takeover by CRH of the business of Lafarge in Romania29 as part of the divestment commitments undertaken towards the European Commission in the context of the global Holcim/Lafarge merger. Up to May 2016, the CC has an ongoing analysis of a significant merger in the retail sector: the takeover of Billa stores by Carrefour, which was referred for analysis from the European Commission.
1 Carmen Peli is a founding partner and Mihaela Ciolan is an associate at PeliFilip.
2 2014 OECD Peer-Review on Competition law and policy in Romania, available at www.consiliulconcurentei.ro/uploads/docs/items/id9183/peer-review-romania-2014-en.pdf.
3 As per the amendment to the Competition Law adopted in June 2015.
4 An example is Decision No. 29 of 26 June 2013 regarding the takeover by MVM Zrt Ungaria of E.ON Földgáz Trade Zrt Ungaria, E.ON Földgáz Storage Zrt Ungaria and Powerforum Zrt Ungaria.
5 In 2013, the CC started to use new methods of economic analysis prior and post clearance in its analysis of concentrations in the retail sector: the gross upward pricing pressure index for ex ante analysis, and the difference in differences (DID) method applied in ex post analysis. For more details regarding the methods, see Romanian Competition Journal No. 2-2013, www.consiliulconcurentei.ro/uploads/docs/items/id9047/rrc_nr_2-2013.pdf.
7 2015 Competition Council: Annual Report.
9 For more details about the transaction, see Section II.iv, infra.
10 For more details about the transaction, see Section II.iii, infra.
11 Decision No. 60 of 2 December 2015 regarding the takeover of International Healthcare Systems SA by Diaverum Romania SRL and Diaverum Holding SARL.
12 Decision No. 46 of 14 November 2014 regarding the takeover of assets of Angst Retail by Mega Image.
13 Decision No. 48 of 20 October 2015 regarding the takeover of assets from Nic Import Export.
14 Decision No. 33 of 26 August 2014 regarding the takeover by Agrana Zucker of assets of Zaharul Liesti SA and Lemarco Cristal (both companies being under the sole control of Lemarco SA).
15 As defined by EU Regulations Nos. 891/2009, 1234/2007 and 1308/2013.
16 Producers reportedly had a rather short amount of time to respond to the offer of import licences, as the commitments were sent in final form to the authority on 15 July, and the acceptance of licences by the interested competitors were to have been received by 31 August.
17 A market year was defined by the authority as lasting from October to September in each calendar year.
18 Decision No. 22 of 2 July 2015 regarding the takeover by ITF SpA of assets corresponding to perfumes sold under the ‘Laura Biagiotti’ brand (following the takeover of ACE business).
19 Decision No. 14 of 7 April 2014 regarding the takeover by Fater SpA over ACE business.
20 Application of Article 65(3) of the Competition Law.
21 See footnote 7.
22 Decision No. 11 of 18 March 2014 regarding the takeover of Compania Romprest Service SA by Europrest Invest SRL and Premium Management Team SRL.
23 Decision No. 48 of 29 August 2012 regarding the takeover of Simcor Var SA by Carmeuse Holding SRL, contested by Holcim SA.
24 As per Decision No. 5 of 27 January 2015, the Swiss franc to euro rate increased by more than 80 per cent during 2008–2014.
25 Decision No. 11 of 24 March 2015 for the takeover of assets from Complexul Energetic Oltenia SA by CET Govora SA; Decision No. 24 of 2 July 2015 for the takeover of Fashion Days Shopping SRL by Dante International SA; these decisions have been identified as the CC decisions that cleared the transactions.
26 See for example, Decision No. 12 of 25 March 2015 regarding the takeover by Dalli Production Romania of assets of Detergenti SA.
27 Decision No. 13 of 9 February 2016 regarding the takeover by Interbrand Marketing & Distribution SRL over Europharm Holding SA.
28 See footnote 2.
29 Case No. COMP/M.7550 – CRH/Holcim Lafarge divestment business of 24 April 2015.